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Median Crash Brewing?

This is 2990 Slater, the November month to date median priced Washoe County home sale. Not to go all bear on you, but it sold for $167,000, or about 15% under the October median.

Here’s my methodology – I download the year to date sales file from the Assessor, select Single Family Residence, select homes built 2010 or earlier, and select Good Sale code 2D to eliminate bank foreclosures, sort by price, then count. Not perfect, but I’m consistent.

TOB has a different methodology since it is based on MLS data, but I will include their numbers for comparison so you can see how are numbers have been tracking. Our trends should coincide pretty well.
November median SFR sale to date: REreno: $167,000. RRB: NA

October – REreno: $190,000. RRB: $180,750.

September – REreno: $185,000. RRB: $176,500.

August – REreno: $190,000. RRB: $175,000.

July – REreno: $177,000. RRB: $165,000.

The REreno figures average about $12,000 over the RRB figures but are pretty consistent.

So what is up with the November median? Data blip or a major cooling off in our marketplace?

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10 thoughts on “Median Crash Brewing?”

Mike,
I learned from Nate Silver in this last election, that you really must rely upon and believe in good data. Your data appears to be good.

That said, I’ve been out there, hitting the pavement, and there appears to be no let up in demand under $200k. Will that single fact be able to hold up the median? No, I think not. But, people shouldn’t be fooled into thinking that Crash #2 is right around the corner. It is not. This is a seller’s market under $200k, and I think that price point will drift up in the next year or two.

I’m on record (and derided) over at RRB saying that I wouldn’t be surprised to see rather rapid 30% rise in the median, just to account for inflation or a historic 2% increase in home value since 2002.

I double checked my research today, and my findings are holding. I asked Guy about it, and he says MLS data to date is running about equal to last month at $180K. It will be very interesting to try to suss out why are data is diverging so radically mid-month.

Crash? I was just trying to incite one of our commentators before he crawls into his tree trunk and hibernates for the Winter (waking up to find Spanish Springs up 25%!). The rEALTOR (sic) media machine is running at full “buy now” mode right now, and I wanted to add at least a question for them to consider.

I don’t believe in this market because I believe speculators and stability are mutually exclusive. This is a speculator’s market. I don’t care if the median goes to $400k, you need stable, well-paying jobs for a healthy, sustainable housing recovery. How’s that coming along- the job and wages thing? How’s the global debt bubble going? This is nothing but a government engineered fake recovery driven by zero down FHA loans, hedgie cash, and helped along by Chinese money-laundering. Go ahead, disagree with me, but I like my track record.

The biggest glitch in this market is that most homeowners can’t or won’t sell until they can at least walk away even from that bubble buy or refi. The market is going to have that highly unusual sticking point for a long time. Shortselling makes a ton of sense financially, but many won’t qualify, or don’t want the hassles, so we have a highly skewed market until then.

I think these pricing levels will stick. At a 142K median, homes were well below replacement cost and undervalued. Even at the current level – price to income, low interest rates, and rent vs buy tradeoffs remain favorable. Housing, like most markets, is suseptable to overshooting their tops and bottoms, and then experiencing a quick correction. I think the price appreciation over the last year has been this type of correction.

At the risk of provocation, and of complying with a request for confrontation by BB, I think getting hyperbolic is the wrong way to deal with the economy. Unemployment in Reno has dropped 2.4% since the start of the year. 10.6% isn’t great, but it beats 13%, and is going in the right direction. Government employment is down from what it was before the housing debt crisis, so private employment has recovered by even more than this, and these employment numbers could be better if state and local governments weren’t laying off workers to avoid debt.
There is no “global debt bubble.” All debt is held by people, every single one of whom lives on earth. So global net debt is zero. Many places have rising debts, but others have rising savings and investment. One of those places is China. Because their personal consumption is growing slower than their income, they have high savings rates. If their banks take this money and buy US Government bonds, it’s called investment, not money laundering. US banks do the same thing with your savings.
Is growing US debt going to be a problem in the future? Quite possibly, but if you listen to economists right now, they seem more concerned that the debt could stop growing fast enough if the laws are not changed to prevent a return to Clinton era tax rates and some spending cuts (the “fiscal cliff.”) If the government “engineers” a recovery by keeping lending rates low until the private sector moves closer to full employment, exactly what part of that is “fake?” Which of the new Reno jobs since the start of the year is “fake?” And isn’t that why we have a government- to “engineer” a recovery when bad business practices result in high unemployment?
So BB, I did it. I disagreed. Flame away. This blog had gotten too quiet anyway.

Bad business practices? Perhaps you are referring to greedy banksters as I have found no connection to business practices and the financial crisis.

To listen to your viewpoint – a significant number of businesses conspired in bad business whereas facts show it was a fault in agency regulation (govt) the Federal Reserve and the Clinton and Bush administrations. Perhaps you should review the Scorpion and frog tale. The above groups were the main culprits, allowing Wall Street a free run in the candy store.

As far as engineering a recovery, it apparently doesn’t seem strange to you that the same people that engineered the crisis are the same people in charge of engineering the recovery. Good luck with that liberal socialist viewpoint. Short of WWIII, I cannot see a lasting recovery with these people in charge.

Your are right about the same clowns running the circus. The housing bubble was a result of the credit bubble that has been growing for 30 years and really began mushrooming out of control around 2004. Both the Bush and Obama administrations have been dead set on re-inflating and and keeping the credit bubble alive via the FED. No mystery why this is happening as most of the high powered financial advisors in both administrations were either GS Alumni or closely connected with Wall Street.

The last time I checked banking was a business. I don’t disagree that government regulators should have done a better job overseeing the banks. I don’t disagree that those oversight problems have still not been satisfactorily resolved. I would be happy if there were some new blood in Treasury and the SEC. But the american household savings is still in positive territory (which it was not in the years before the housing crash.) Our debt is not unmanageable. I just don’t see

Side note: you suggest the root problem was inadequate regulation, implying an argument for more robust federal power over financial markets. Then you criticize robust federal power used to encourage reinvestment in the american economy by the private sector. And somehow this distinction means that I am a socialist. We are all talking about government regulation of private industry. No one is talking about government run industry, or socialism, or world war. Where do you get this stuff?

No, I suggested the root problem was lack of enforcement by govt agencies. They failed to enforce regulations already on the books. As far as more regulation, we got that anyway via Sarbanes and Dodd/Frank – neither of which will do as much as Glass-Seagall did to contain the financial sector. When you say “our debt” I assume you mean private not govt? As far as bad business practices – where? The banks were given a green light via GLBA. Pretty much sums up why none of these guys were charged with fraud. Also, they managed to “con” congress into bailing them out under the guise of a collapse in the financial markets. Wall street speak for we’re going broke – Send Help! As far as WW 3 – we are following a similar path set by FDR and after all the help he created via useless new govt run “projects” only WW 2 got the unemployment rate down. So, unless this administration can pull yet another rabbit out of its hat then that seems to be the most likely way for the 92% (in this administration) that have never worked in the private sector to come up with a plan to get people back to work. However, you claim bad business practices resulted in high unemployment, which wasn’t the exact reason, as it was a domino effect.

If I had the power, I would repeal CRA, GLBA and modify or repeal the Commodities Future Act (in regards to derivatives) additionally making redundant and unnecessary Sarbanes and Dodd/Frank. So, there you have it – my over regulating by getting rid of 5 unnecessary Acts. And too damn bad if the people that can’t afford a house will not be able to get a sub prime loan. Still, probably won’t do any good as the financial sector has a way of coming up with a new crisis about every twenty years and Congress sees fit to once again bail them out.